Health budget cure needs accurate diagnosis

March 7, 2014

The Federal Government has been warned against taking a blunt approach to curbing health care spending as Health Minister Peter Dutton flagged the need for a fundamental overhaul of the Medicare system.

In what he said would be the first in a series of “headland” speeches, Mr Dutton told the Committee for the Economic of Development last month the health system was “tracking on an unsustainable path”, with expenditure more than doubling in the past decade to reach $140 billion in 2011-12.

“In the past 10 years, we have seen the cost of the Medicare Benefits Schedule increase 124 per cent, the cost of the Pharmaceutical Benefits Scheme increase 90 per cent, and the cost of hospitals increase 83 per cent – with no signs of slowing down,” the Minister said. “Doing nothing about sustainability is not an option.”

AMA President Dr Steve Hambleton said that it was “the right time” to be discussing rising health costs, but urged a considered approach that took into account evidence of effectiveness and efficiency as well as expense, and which did not result in policies which would ultimately be counterproductive.

Dr Hambleton said the per capita cost of GP visits had been stable for the past five years, while PBS spending had “actually come back a little” as expensive medicines had come off patent.

The AMA President said the focus should be on a Government-wide approach to tackle the causes of chronic disease, backed by ease of access to primary health care services.

“We’ve got to think about what the drivers of health care costs are, and make sure we deal with things like tobacco, alcohol, over-nutrition and under-exercise,” he said. “It’s not just the health portfolio that needs to focus on health care costs, it’s the other portfolios as well.”

Mr Dutton’s speech followed weeks of speculation that the Government was considering introducing a $6 patient co-payment for GP visits, and the Health Minister appeared to lend weight to the idea when he said that “one important job of the Abbott Government is to grow the opportunity for those Australians who can afford to do so, to contribute to their own health care costs”.

He reinforced the point a day later in an interview with the Daily Telegraph in which he said, “I question whether someone on an income of $200,000 can have an expectation of going to the doctor for free. That is one of the conversations we have to have.”

But the same day, Prime Minister Tony Abbott fuelled uncertainty about whether his Government would introduce a GP co-payment.

“Obviously, the Budget, generally, is under pressure, and it’s very important that we do what we can to fix the Budget,” Mr Abbott said. “But we’ve got to do it in ways consistent with our pre-election commitments.

“Don’t forget, I said we were going to be a no surprises Government. You might also remember that I was the Health Minister in a former Government, and…I used to say that that Government was the best friend Medicare had ever had.

“This leopard doesn’t change its spots – I want this Government to be, likewise, the best friend that Medicare has ever had.”

The Prime Minister’s comments were taken as some as killing off the idea of a GP co-payment, but Australian Financial Review political editor Laura Tingle cautioned that they did not rule out “much at all really, just anything he can’t argue will somehow be ultimately good for Medicare’s long-term health”.

More clearly, Mr Dutton flagged the likelihood that the private sector, particularly private health insurers, were likely to become bigger players in the health system.

There has been discussion about the possible involvement of private health funds in covering primary health care services – something that is prohibited under current legislation.

“Why shouldn’t we be open to greater involvement of the insurers, who cover 11 million Australians, to keep those people healthy and getting more regular access to primary care?” the Minister asked. “We should be leveraging the private sector, not just for services, but to meet workforce training challenges.”

The Health Minister also flagged a fundamental change in the way health spending should be assessed.

“We need to look at increasingly moving from managing supply, as measured by the volume of services provided, to managing demand, as measured by improved health outcomes,” he said.

Dr Hambleton said the AMA was “very interested” in exploring opportunities for private health insurers to support the work of GPs.

But he said that must not come at the cost of equity of access to care.

The AMA President said that, similarly, the Government needed to be careful about the way it might seek to get the better off to make a greater contribution to their health care costs.

Dr Hambleton said Australian patients already faced the fifth highest out-of-pocket expenses in the developed world, and making it more difficult for people to get primary health care could backfire.

“We’ve got to be very careful [that], if you use a blunt instrument like co-payments, that we don’t get perverse outcomes,” he said. “There are think tanks internationally saying if you want to increase the efficiency of your health system, you lower the barriers to primary health care, you don’t lift them.”

Dr Hambleton said that if patients deferred a visit to their GP, in many cases they might end up in hospital, where care is much more expensive.

The AMA President, who is due to meet with Mr Dutton later this week, said there was great potential for health efficiencies and savings through investing in primary health care, including by supporting GPs in looking after patients with chronic disease, as well as improved end of life care arrangements.